Is Membership the Key Issue?

There is no doubt Perth Glory needed Peter Filopoulos, even if they did not want him.

The Club desperately needed a CEO who came from outside of the owner’s close circle of business acquaintances. After the debacle of last season, where players were paid under the table, the fans were expected to swallow the fact that only one man knew about it, the former CEO, Jason Brewer; who is still employed by the club’s owner. How many employers would find a job for a man who ruined their chances of a first A-League title if they were not aware of what was going on?

One of the first things that the new CEO wanted to do was apologise to the fans for what happened last season. Immediately he showed with that gesture that he was a football man. As he obviously grasped the disappointment and hurt that was felt by the loyal fans who continue to support the club. There was nothing much he could do, but a public apology, the first of its kind, went a long way to winning many over.

The crazy thing is on the day of the Fan Forum, which turned out to be more of a propaganda-fest than a forum, a meeting was held to determine the wording of this apology. According to sources within the club the article published in the Sunday Times two days before the Forum where Mr Filopoulos announced he would be apologising caused quite a stir. There were certain staff who felt the apology was wrong and should not be made. So a meeting was held as to how this would be worded at the forum.

If Peter Filopoulos had done his home work, and thought the job was going to be hard before heading to Perth that would no doubt have made him realise the size of the task ahead.

Filopoulos’ sports administration pedigree is first class. He spent five years as general manager (commercial operations) at North ­Melbourne, three years as director of sales and ­corporate marketing at Hawthorn, seven years as director of sales, marketing and com­munications at Etihad Stadium, and just over a year as chief commercial officer at Swimming Australia, before taking the role with Perth Glory.

More importantly he started in football having spent almost seven years at National Soccer League giants South Melbourne as CEO from 1992-1999. So he knows first hand what can be achieved in Perth with a properly run franchise that engages the public, and is promoted.

Mr Filopoulos was last week quoted as saying in The Australian, “In the short to medium term we are trying to fix the profit-and-loss issue. The business loses money every year and the owner has to tip in the shortfall. Increasing revenue and managing costs is essential. We need $10 million annually to break even and $11m to start making money. In the long term, I need to put pen to paper on a four-year strategy and what sort of club we want to be on and off the field.”

The problem is at the moment some of the structures are simply not good business. To have nine different tiers of membership in order to try and entice fans back through the gates is not good management in the long term. It may be great to boast that you have 5,000 members for your first home game, but one has to look at those memberships and how they are structured and crucially how many of what tier have been sold. Rest assured there are not 5,000 members paying the top price of $775 for the season. Many will be on the Flexi 5 Game membership of $135, or possibly the Deep Purple membership worth $99 for “One (1) ticket to any two (2) Perth Glory HAL 2015/16 season.”

The interesting aspect to this key figure is that despite what has been broadcast to the public about memberships went down in 2012 and rose again in 2013 and 2014 whereas sponsorship went down. From 2012 – 2013 it dropped by over $700,000 and from 2013-2014 a further $176,000. This means from 2012 to last season a drop in revenue of $909,000.(corrected 21/10/2015 Originally quoted were memberships when it should have been sponsorship Membership revenue in fact decreased $208,458 from 2011-2012, but increased by $181,906 in 2013 and rose by $102,081 in 2014)

Sadly the Twitter obsessed CEO did not help the cause when he upset fans on Twitter after the Wellington Phoenix game. When questioned about the cost of a walk-up ticket, $35, Mr Filopoulos respond by tweeting “Buying a membership ensures you get the best value.” The new CEO then boasted that he had taken out membership to Richmond AFL side even though he was unlikely to see a game. His point being as he tweeted that “many people become members to support club vs Value.”

Mr Filopoulos is right, many people do, but usually only those who can afford it. Sadly times are tough for many people and so they have to watch the money they spend, and where it is spent. His comments reveal a man who is out of touch with reality, maybe too long spent in high paying positions and not connecting with real fans rather than the ‘Chardonnay set.’ Another point he maybe has not considered is that Perth Glory Members are not really ‘members’ in the true sense of the word. They have no say whatsoever in the running of the club, no voting rights, nothing. There is no Annual General meeting unlike the club he renewed his membership with, so already those who have taken out memberships have shown that they are special, as they have simply handed over their money for tickets and a beanie; not literally!

It appears that there is a huge emphasis on memberships and one wonders if this is purely a cash flow issue, as it has been alleged that all monies from merchandise sales do not go back into the club, but to the owner. In 2014 Merchandise generated $177,000 but actually cost over $190,000. So if the owner has paid out for such goods to be created one can understand why he would want to cover those costs.

With so much emphasis on memberships one problem Mr Filopoulos will face is that if the team continues to play the way they have started this season the short term memberships are unlikely to be renewed and crowds will fall from the 8000 who were reported to be at the opening game on the weekend.

To complicate issues further the club is for sale, or at least 80% of it. So how can a four year plan be put into place with confidence that it will be implemented should the club be sold?

Mind you with the current owner wishing to maintain 20% ownership and have two seats on the board, as well as be paid US$11million for the other 80%, there is very good chance that a buyer will not be stepping forward in the very near future.

There is no doubt that the new CEO means well, but one senses despite the owner claiming he will not be talking to the media, Filopoulos will need to be careful how popular he becomes, and how much time he spends in the limelight. For let us not forget one of the main reasons the owner bought Perth Glory, was to raise his own public profile. The last thing he will want is his CEO taking the spotlight away from him.

As always with Perth Glory there are interesting times ahead.